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That makes two quarters in a row.

Morgan Stanley beat Wall Street estimates for second quarter earnings on Wednesday, following the trend set by its peers. Each of the key business lines at the bank posted increased revenues, with revenues more broadly holding remarkably steady.

Baupost Group, a $30 billion hedge fund, has laid out a road map for market chaos. In a second quarterly private letter that was reviewed by Business Insider, Baupost said that the problem lies with a signature feature of current markets: low volatility.

"Structural leverage linked to low realized volatility may well prove destabilizing and the precipitant, or at least an accelerant for the next financial crisis," the letter said.